Henry George, the Nineteenth Century advocate of a single tax on land,
had an excellent understanding of problems of myriad tax systems, but
Henry George also was influence by Marxist thinking about value which
as material and not intellectual (in his case land and not labor). His
passion, persistence, and eloquence in advocating a single tax on land
has intrigued policy junkies ever since. The calls today for tax reform
come for several different reasons.

Tax reduction is based upon the simple arithmetic of exploding revenues
and decreasing percentages of national wealth available for private choices.
Tied into arguments for tax relief is the almost tautological analysis
of the Laffler Curve: Tax revenues are maximized at some rate between
zero percent and one hundred percent, and without regular rousting by
taxpayers, tax rates tend to slide away from the optimum revenue point
towards increasingly higher rates.

The argument for tax reduction is also based upon a twist on Engel's
Law, which postulates that the rich tend to invest a higher percentage
of their income than the poor. Yes, those who have earned more will invest
a higher percentage of their income than those who earn less. Those high-income
producers also have the best handle on increasing the production of wealth
in which all society shares.

Tax simplification reduces the burdens of tax compliance, reduces the
silly decisions that tax breaks produce, and reduces the additional risk
added to investments of money, thought, and time when the rules of taxation
are needlessly complex and constantly changing. Tax simplification is
part of a greater argument for simplification of law and regulation, an
argument are based upon the premise that predictability increases compliance,
respect, efficiency, and a perceived common investment by many members
of society.

Tax fairness is an idea that leads to different policies based upon the
conflicting visions of how wealth is produced. Under Marxist doctrines,
success in a market economy is the result - intended or not - of exploitation
of those without capital. Under libertarian principles, exploitation is
impossible in a market free from coercion and with some mechanism for
validating market information (with the best mechanism being the market
itself over time). Fairness in a universe apparently filled will nothing
but unfairness, produces as many theories of fair taxes as theories of
fair societies. This process - what Dr. Sowell calls "The Search
for Cosmic Justice" transcends generation, gender, and geographical
boundaries.

Taxation without representation is another argument for tax reform. This
argument involves much more than the clarion calls of our Founding Fathers.
Tariffs are a tax imposed by a government against its subjects and people
in foreign lands. Federal taxation and much state taxation is based upon
regulatory interpretation and judicial decisions, both of which have the
most tenuous and ephemeral connection to actual consent of the taxed.

Taxability is another component of tax policy which has always existed,
but which tends to become more important as technology and information
grow. Most wealth today is information. How, precisely, does government
tax information? Which government has the right to tax information? As
income becomes electronic, how is that taxed? And how are those increasingly
important parts of what most of us would consider "the market"
taxed?

Other values also elude taxation. People make huge investments in physical
attractiveness and health: Are the returns on those investments taxed?
Beauty, health, and life itself are more fundamental values than monetary
taxation, and yet as medicine and biology grow more powerful, these may
become over time greater parts of any values individuals can acquire.
Taxability is largely based upon symbols and components that are increasingly
irrelevant to modern life: wages, dividends, real estate, commodities,
sales.

Is there a way to fold these different aspects of tax policy and tax
reform into a single, simple tax? Yes, if we are willing to accept improvement
rather than insist upon perfection. Many of the components of this single
tax are straightforward: Income, for all its shortcomings, is the most
reasonable type of wealth to tax - if a single tax is the desired outcome.
Proportional taxes do not exactly meet the Marxist notion of fairness
(our progressive income tax system does), but proportional taxes are what
most people seem to believe that we have, and proportional taxes have
the marked advantages of crediting no disincentives to creating additional
wealth. Proportional tax rates should be adequate to pay the bills, which
includes all obligations of the federal government.

The benefits of a single federal flat income tax rate replacing other
federal revenue sources are much discussed, but a single, simple tax requires
more. It should be extended to cover all expenses of all levels of government,
including quasi-governmental assessments by public non-governmental agencies.
States should be given the option of repealing all state taxes and receiving
a percentage of the overall tax raised by the federal government from
that tax, or maintaining their existing tax systems and receiving none
of this revenue. The practical political pressure to repeal all state
taxes would be irresistible, and those few states that did not quickly
do so would face an immediate flight of capital and labor.

The true tax burden of federal, state, and local governments exceed forty
percent, and a flat federal tax to pay for the costs of all government
would produce a "sticker shock" on families dependent on regular
wages and salaries. This apparent loss would be quickly mitigated by a
dramatic reduction in prices for goods and services and a corresponding
increase in income, particularly for the self-employed or those working
for smaller and more flexible businesses.
Some enterprises might receive a transitory "windfall profit"
but markets would quickly move those atypical profits into lower prices,
higher quality, or greater quantity.

Some low-income families could face temporary distress - in spite of
the overall benefits increased income and lower prices - because of a
tax withholding bite much bigger than before. One way to approach this
might be to sell off substantial amounts of the federal land holdings
in western states, with the possessors the likely purchasers and the land
itself the collateral. This one time influx of revenue could allow a reduction
in rates for the first $25,000 of family income for the first year of
implementation.

As the true cost of federal operations became clear, and as the proportion
of all incomes going to support that became connected in public consciousness,
the flat tax rate necessary to support government would drop steadily
because support for obviously wasteful or inefficient programs would confront
not just the nebulous "cost of government" but could (and should)
be explicitly listed each year in the income tax return that each taxpayer
would file. All taxpayers, in short, would be given the equivalent of
an itemized "bill" from the federal government listing the exact
amount the taxpayer was providing to different bureaus, departments, agencies
etc. Those states that opted into making the federal government their
sole collecting agency (soon virtually every state) would likewise present
a bill.

There is nothing like reducing down to the penny how much a consumer
is paying for a list of services to make the consumer a picky buyer. One
logical evolution of this would be allow taxpayers to indicate in a standardized
way on their tax returns whether or not they felt that certain items were
good or bad purchasing decisions by their elected representatives. This
response should also solicit an opinion on what the standard tax rate
should be (and what "hard decisions" should be made to make
the income and expenses equal. When the results of this survey was made
public, legislators would view pork as less delicious.

The cumulative effect would be to combine an explosion of entrepreneurial
energy in the private sector with the liberation of many stagnant assets
in the public sector. Most pleasant in this system of a single, simple
tax with an itemized "bill" for services purchased by the agents
of the citizen-taxpayer would be its self-correcting nature. Not all government
services are wasteful and not all expenditures are unnecessary.

Few thoughtful people in 1942 begrudged heavy taxes and accumulated government
debt connected with the building of Liberty Ships, P-51 Mustangs, Carrier
Task Forces, and Jeeps. People much prefer spending dollars than the blood
of their husbands, sons, and fathers and much prefer freedom to slavery.

President Eisenhower's commitment to building an interstate highway system
was a good investment in economic, social, and military terms. Ike sold
that package to the nation, and people understood that it would cost them
tax dollars.

Childhood vaccination, public schools, parks for recreation and conservation,
libraries, clean water supplies, and mass transportation systems are examples
of government expenditures that taxpayers will support with their dollars
if they work and if they are limited in scope.

The reason why governments routinely budget badly is that no real information
flows back and forth between taxpayers and policy-makers, and the scant
information that exists comes from those very people whose status and
income depend upon success - how many factory managers did not meet Stalin's
Five Year Plan goals? Taxpayers need two precise data each year: (1) How
much am I actually paying to support government? (2) What am I getting
for my payment? When this information flows back to government, then government
will resemble much more a market and government efficiency will increase
geometrically.

So who would be hurt? Those professionals whose income and wealth depend
upon the complexities and variables of different tax systems, and those
downsized government managers. Although tormented taxpayers might harbor
a malicious delight in impoverishing these old foes, that sentiment is
counter-productive and self-destructive. Those who believe that liberty
promotes the general welfare, after all, correctly see that markets are
not "zero sum" processes with losers equally balancing winners.
And only a fool would undervalue the skill and solidarity of these defenders
of our current system.

Many of these professionals could naturally migrate skills to the new
and better economy and so might support reform for selfish or public-spirited
reasons. Accounting, for example, is at its core a system for accurately
measuring economic activity that is a valid purpose. Tax lawyers also
could spend some little time explaining and reassuring corporate clients
about the changes in tax law. And, of course, residual tax liabilities
and determinations would linger for years.

Still, in this single instance, it might be valuable to reassure middle-aged
professionals who have devoted their working life to mastering the intricacies
of tax law by providing federal assistance in establishing new businesses.
Call it a federal bribe, if you must, but the effect is still the same:
Minimizing the political opposition to tax simplification, and so insuring
its success. In fact, these tax professionals - those often most cognizant
of the opportunities lost because of tax problems - might well be the
leaders of a new generation of economic pioneers.

One tax, one very simple tax. One tax bill, one tax bill with a customer
comment card attached.

Those howling monkeys, who rage at human happiness and individual freedom
would, of course, fight this with every rock and stick they would grab.
But this is one reform - perhaps "the" reform - that would resolve
forever the dangers of the welfare state, the socialist mind set, and
the smoldering battles of class, race, and gender. Pass this one bill
and perhaps all legislation after that will be just commentary.

Bruce Walker is a frequent contributor to The Pragmatist and The Common
Conservative.